Canadian October home sales dip, latest sign of cooling

TORONTO (Reuters) – Sales of existing homes in Canada fell in October from September and year-over-year sales were down as well, the Canadian Real Estate Association said on Thursday in the latest signal that the housing market is slowing.

The industry group for Canadian real estate agents said sales were down 0.1 percent in October from September. Actual sales for October, not seasonally adjusted, were down 0.8 percent from a year earlier.

The housing market, which roared higher in 2011 and the first half of 2012, started to slow after the government tightened rules on mortgage lending in July in a bid to cool the market and prevent home buyers from taking on too much debt.

“Housing market trends in Canada for 2012 can be characterized as before and after regulatory changes,” TD Economics senior economist Sonya Gulati said in a research note.

“In the first half of the year, sales and price gains were modest, but positive. More stringent mortgage rules and tighter mortgage underwriting rules have ‘purposely’ knocked the wind out of the housing market sails,” she said.

The home sales data showed diverging paths in Canadian housing depending on location. In Toronto and Vancouver, where sales and price gains were red hot in 2011 and early in 2012, the market has been cooling. But markets in the resource-rich western provinces of Saskatchewan and Alberta have been gaining strength.

“Opinions differ about how sharply sales have slowed depending on the local housing market,” Gregory Klump, CREA’s chief economist, said in a statement.

Led by Calgary, sales in October were up from a year earlier in almost two-thirds of local markets. Sales remained blow year-earlier levels in Toronto, Vancouver and Montreal, CREA said.

“These results suggest that the Canadian housing market overall has returned to a more sustainable pace,” Klump said.

CREA’s Home Price Index rose 3.6 percent in October from a year earlier, the sixth consecutive month in which gains in prices slowed, and the slowest rate of increase since May 2011.

While tighter mortgage rules have worked to slow the market, TD’s Gulati said the big question is what will happen when that temporary cooling effect wears off in early 2013.

“What happens thereafter is less certain. The low interest rate environment could pull homeowners back onto the market, causing home prices to once again trek upwards. Alternatively, an absence of pent-up demand may leave the market in a bit of a lull until interest rate hikes resume in late 2013,” she wrote.

“Under either scenario, it is safe to say that there is a low probability of out-sized home price gains over the near-term.”

A total of 402,322 homes traded hands via Canadian MLS systems over the first 10 months of 2012, up 0.8 percent from the same period last year and 0.4 percent below the 10-year average for the period, the data showed.

The number of newly listed homes fell 3.8 percent in October following a jump in September. Monthly declines were reported in almost two-thirds of local markets, with Toronto and Vancouver exerting a large influence on the national trend.

Nationally, there were 6.5 months of inventory at the end of October, little changed from the reading of 6.4 months at the end of September.

(Editing by Peter Galloway)

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“Sister” Director Tackles Taboo of Switzerland’s Class Divide With Her Oscar Contender

LOS ANGELES (TheWrap.com) – Director Ursula Meier can hardly believe that her film “Sister” – which depicts tenements, poverty and a seemingly rigid class system in lovely Switzerland – has made it over the Alps to Hollywood for Academy consideration.

“It shows a not-very-usual aspect of Switzerland,” Meier told the audience at a showing of “Sister” Thursday night at the Landmark, part of TheWrap’s Academy Screening Series. “We don’t show the beautiful mountains and the green and the lush life … For me it was important to show another point of view on this country to the world. Because usually it’s Montblanc, chocolate, and Swatch.”

Indeed, with her second film, Meier has given international audiences something else to associate with Switzerland: larcenous snow urchins.

“Sister” centers mostly around 12-year-old Simon (Kacey Mottet Klein), who lives in a high-rise tenement in a not-so-snowy valley far below a ski resort and takes gondolas to the top to steal wealthy tourists’ skis right out from under their goggles.

Wily Simon is financing not just his own existence but that of Louise (Lea Seydoux), the title character, who just might be the worst parental figure or caretaker in a cinematic year that did, after all, include “Beasts of the Southern Wild.”

It would involve spoilers to explain why Simon’s older sis is not everything she’s cracked up to be. But there’s nothing misleading about this boy-crazy, substance-abusing twentysomething gal’s unfitness to watch over Simon, the breadwinner of their sad two-person family.

He has to empty out his cash drawer to bribe Louise into snuggling with him, and when he entrusts her with the mere task of waxing skis, she can’t even do that without spilling cigarette ashes on the stolen merchandise.

“It was important for me, when we were at the ski resort, to showing the back door of the restaurant, and the workers inside … And it’s just at the end, when it’s finished, when there is no more snow and the ski resort is closed, for the first time Simon looks at the landscape. And we can see how beautiful this place is, but it’s too late now.”

Meier worked with her young leading man on her first theatrical feature, 2009′s “Home,” where he played Isabella Huppert’s son when he was just 7. She’s emphatic that Klein is not the kind of child actor who has to be tricked into giving a performance.

“During the first casting, I ask him, ‘What do you like to do in your life, Kasey?’ And he told me, ‘Thinking.’ So I said ‘OK, think,’ and I turned on the camera, and he was amazing … He understands that acting is to be, not to look like. So I really wanted to write for him with this film, because it was such an amazing experience on my first film.”

The role of the severely neglectful “sister” was tougher to nail down, both for the director and her leading actress.

“This character was the challenge of the film,” Meier said. “Because Kacey’s character is a child, so for the spectator, of course he’s a victim. But with the character of Louise, for Lea as an actress, at the beginning for her it was very hard to find the fragility of the character. I showed her a lot of films like ‘Vagabond’ … I explained to her, you were 14 when you were pregnant; it was too young for a girl, and you stopped your studies and got bad jobs you cut with your family.”

Sometimes, she said, they’d fight because “she couldn’t find the fragility of the character, and suddenly, months later, wow – it was like we cut something open and all the emotion that came out from her was very deep. I was afraid of the spectators judging the character. It was not easy, in the writing, or in the directing with the actors, because I wanted that they would love these characters, even if they’re sometimes terrible. But I like terrible characters.”

Pond told Meier that when it came to supporting actress Gillian Anderson, of “X-Files” fame, “the first time I watched, I didn’t realize it was her till the end credits” – an experience probably shared by most of those in attendance at the screening.

“I’m very happy that you say that,” said Meier, “because if you recognize the actress, you think about the actress.” But the director did want Armstrong to provoke a where-have-I-seen-you-before vibe.

“I really wanted to be played by a star – not to have a star in my film, but because it was important for Simon to have a kind of phantasma this lady, of what he wants as a mother.

And as a spectator, you can have a phantasma on the star. So I like that she came from another country, and not speak French, because she’s almost an apparition.”

Meier admitted she was frightened before the Swiss premiere – before “Sister” went on to play various fests and win the special Golden Bear award at the Berlin Film Festival.

“When I had the first screening in Switzerland, a lady came back to me and was very moved by the film, because it’s usually a taboo to show poverty in Switzerland. She cried and told me, ‘I grew up in exactly the same place. My father was a worker in the factory we saw in the film, and as a child we never had the money to go up.’ I liked that she just said up.”

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Tulsa Town Hall: Nutrition a valuable tool in health care

Weil spoke as part of the Tulsa Town Hall series of speakers.

The United States has an expensive health-care system that doesn’t produce good results, he said.

“Something is very wrong with this picture,” he said. “We’re spending more and more and we have less and less to show for it.”

Changes in diet can be an effective treatment for many conditions, but American physicians are functionally illiterate in nutrition, he said.

“The whole subject of nutrition is omitted in medical education,” he said.

There are many ways of managing diseases other than drugs, he said. Integrative medicine, which can include dietary supplements and practices like meditation, is the future of health care, he said.

The health system is resistant to change because of entrenched vested interests. That includes pharmaceutical companies that do direct-to-consumer advertising, which should be stopped, he said.

“As dysfunctional as our health-care system is at the moment – and it is very dysfunctional – it is generating rivers of money,” he said. “That money is going into very few pockets.”

Weil has developed an anti-inflammatory diet based on the Mediterranean diet but with Asian influences.

Inflammation is associated with some heart disease, Alzheimer’s disease and some cancers, he said. And as a result, people should be eating real, unprocessed foods and whole grains. They should stay away from sugar-sweetened beverages, including fruit juice, he said.

“The new research that’s being done on sugar is not very comforting,” he said.

The aging process can’t be avoided, but age-related diseases can be avoided by proper care, he said.

“The goal should be to live long and well with a big drop off at the end,” he said.

Weil is the director of the University of Arizona’s Center for Integrative Medicine.

Tickets to the Tulsa Town Hall series are sold as a $ 75 subscription and cover five lectures. Tickets for individual lectures are not available.

To subscribe, visit tulsaworld.com/tulsatownhall, call 918-749-5965 or write to: Tulsa Town Hall, Box 52266, Tulsa, OK 74152.

Future speakers include journalist Ann Compton on Feb. 8; author James B. Stewart on April 5; historian and cinematographer Rex Ziak on May 10.

Original Print Headline: Speaker highlights nutrition

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Shannon Muchmore 918-581-8378
shannon.muchmore@tulsaworld.com
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Congressional leaders optimistic after meeting Obama

WASHINGTON (Reuters) – Republican and Democratic congressional leaders emerged from a meeting with President Barack Obama on Friday pledging to find common ground on taxes and spending that would allow them to avert an upcoming “fiscal cliff” that could send the economy back into recession.

The top lawmakers spoke to reporters as a group for the first time in more than a year in what aides said was a joint decision to project a message of unity.

Each side at least signaled a willingness to put “on the table” issues dear to the two parties for decades, agreeing on a framework to discuss both tax and entitlement reform next year.

The two Democrats, Senate Majority Leader Harry Reid and Nancy Pelosi, the minority leader in the House of Representatives, said they recognized the need to curb spending.

John Boehner, the Republican speaker of the House, and Mitch McConnell, who leads the party in the Senate, said they had agreed to put “revenue on the table” as the two sides enter what are likely to be weeks of tense negotiations before a December 31 deadline.

Starting on January 2, about $ 600 billion worth of tax increases and spending reductions, including $ 109 billion in cuts to domestic and defense programs, will begin to kick in if Congress cannot decide how to replace them with less extreme deficit-reduction measures.

Nonpartisan budget forecasters say failure to reach a deal could push the U.S. economy back into recession and drive up the unemployment rate.

Both sides are eager to reassure the public that Washington will not see a repeat of the white-knuckle budget standoffs that spooked consumers and investors last year.

“We have the cornerstones of being able to work something out,” Reid said, standing outside the White House after a meeting with Obama, Vice President Joe Biden and other top officials that lasted more than an hour.

The S&P 500 stock index has dropped 4.7 percent since the November 6 election as investors have turned their attention to the uncertainty surrounding the fiscal cliff.

But stocks closed up on Friday on hopes that politicians would find common ground to steer clear of the danger.

The meeting marked the first time Obama, a Democrat, sat down with his Republican opposition since he won re-election last week.

“I think we’re all aware that we have some urgent business to do,” Obama told reporters at the beginning of the meeting.

ROOM FOR COMPROMISE?

Obama says tax rates on the wealthiest 2 percent of Americans must rise, while Republicans say they will not agree to any rate increase.

Republicans are also eager to rein in government health costs, which are projected to explode over the coming decade.

“We’re prepared to put revenue on the table provided we fix the real problem,” McConnell said, referring to Medicare and other government benefit programs.

There could be room for compromise.

Obama could agree to allow the top tax rate to rise to something less than the 39.6 percent he wants. Policymakers, for example, could also agree to limit the tax increase to households making more than $ 500,000 annually, rather than the $ 250,000 cap Obama is demanding.

Republicans have suggested generating more revenue by limiting tax breaks for the wealthiest, rather than raising their rates. Obama has said that would not raise enough money.

While the government may have a little flexibility in softening the full impact of the budget cuts, Treasury Secretary Timothy Geithner told Bloomberg TV on Friday the Treasury Department did not have the authority to delay the tax increases that would take effect at the start of next year if the White House and Congress fail to reach a deal.

Business leaders say the uncertainty is already weighing on the economy as employers postpone hiring and capital expenditures until they get a better sense of the tax and spending environment.

Pelosi suggested two sides might forge a temporary deal that would get them past the fiscal cliff and give them more time to work out a more lasting solution. Lawmakers will almost certainly not have time to retool Medicare and overhaul the outdated tax code before the end of the year, but a preliminary agreement could provide a framework for doing so later.

Following the hour-long White House meeting, Boehner said he had “outlined a framework that deals with reforming our tax code and reforming our spending.”

A Boehner aide, who asked not to be identified, said later the spending cuts would cover “entitlements” – the large federal benefit programs that include Medicare healthcare for the elderly and Medicaid for the poor.

“The speaker spoke about a framework going into next year,” Pelosi said. “I was focusing on how we send a message of competence to consumers, to the markets, in the short run, too.”

Leaders of civic groups who met with Obama at the White House later on Friday, said the president assured them he would use his leverage to cut the best deal possible.

“He campaigned around tax fairness and the fact that everyone would do their part, and in particular the most wealthy would find a way to make their fair contribution,” said Janet Murguia, president of the National Council of La Raza, a Latino advocacy group.

Boehner faces a delicate balancing act as he will have to sell any deal to rank-and-file conservatives, many of whom believe they owe it to their constituents to hold the line on taxes.

But after Obama won re-election and fellow Democrats picked up seats in the House and Senate last week, Republicans may be more willing to show that they can balance their ideals with the demands of the country as a whole.

“Going over the fiscal cliff, in my view, is a bucket of crazy,” Republican Representative Peter Roskam, one of Boehner’s deputies, said at a budget conference.

(Additional reporting by Thomas Ferraro, Richard Cowan, Mark Felsenthal and Patrick Temple-West in Washington; Writing by Andy Sullivan and Patricia Zengerle; Editing by Fred Barbash and Peter Cooney)

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Israel moves on reservists after rockets target cities

GAZA/JERUSALEM (Reuters) – Israeli ministers were on Friday asked to endorse the call-up of up to 75,000 reservists after Palestinian militants nearly hit Jerusalem with a rocket for the first time in decades and fired at Tel Aviv for a second day.

The rocket attacks were a challenge to Israel‘s Gaza offensive and came just hours after Egypt‘s prime minister, denouncing what he described as Israeli aggression, visited the enclave and said Cairo was prepared to mediate.

Israel’s armed forces announced that a highway leading to the Gaza Strip and two roads bordering the enclave would be off-limits to civilian traffic until further notice.

Tanks and self-propelled guns were seen near the border area on Friday, and the military said it had already called 16,000 reservists to active duty.

Prime Minister Benjamin Netanyahu convened senior cabinet ministers in Tel Aviv after the rockets struck to decide on widening the Gaza campaign.

Political sources said ministers were asked to approve the mobilization of up to 75,000 reservists, in what could be preparation for a possible ground operation.

No decision was immediately announced and some commentators speculated in the Israeli media the move could be psychological warfare against Gaza’s Hamas rulers. A quota of 30,000 reservists had been set earlier.

Israel began bombing Gaza on Wednesday with an attack that killed the Hamas military chief. It says its campaign is in response to Hamas missiles fired on its territory. Hamas stepped up rocket attacks in response.

Israeli police said a rocket fired from Gaza landed in the Jerusalem area, outside the city, on Friday.

It was the first Palestinian rocket since 1970 to reach the vicinity of the holy city, which Israel claims as its capital, and was likely to spur an escalation in its three-day old air war against militants in Gaza.

Rockets nearly hit Tel Aviv on Thursday for the first time since Saddam Hussein’s Iraq fired them during the 1991 Gulf War. An air raid siren rang out on Friday when the commercial centre was targeted again. Motorists crouched next to cars, many with their hands protecting their heads, while pedestrians scurried for cover in building stairwells.

The Jerusalem and Tel Aviv strikes have so far caused no casualties or damage, but could be political poison for Netanyahu, a conservative favored to win re-election in January on the strength of his ability to guarantee security.

“The Israel Defence Forces will continue to hit Hamas hard and are prepared to broaden the action inside Gaza,” Netanyahu said before the rocket attacks on the two cities.

Asked about Israel massing forces for a possible Gaza invasion, Hamas spokesman Sami Abu Zuhri said: “The Israelis should be aware of the grave results of such a raid and they should bring their body bags.”

Officials in Gaza said 28 Palestinians had been killed in the enclave since Israel began the air offensive with the declared aim of stemming surges of rocket strikes that have disrupted life in southern Israeli towns.

The Palestinian dead include 12 militants and 16 civilians, among them eight children and a pregnant woman. Three Israelis were killed by a rocket on Thursday. A Hamas source said the Israeli air force launched an attack on the house of Hamas’s commander for southern Gaza which resulted in the death of two civilians, one a child.

SOLIDARITY VISIT

A solidarity visit to Gaza by Egyptian Prime Minister Hisham Kandil, whose Islamist government is allied with Hamas but also party to a 1979 peace treaty with Israel, had appeared to open a tiny window to emergency peace diplomacy.

Kandil said: “Egypt will spare no effort … to stop the aggression and to achieve a truce.”

But a three-hour truce that Israel declared for the duration of Kandil’s visit never took hold. Israel said 66 rockets launched from the Gaza Strip hit its territory on Friday and a further 99 were intercepted by the Iron Dome anti-missile system.

Israel denied Palestinian assertions that its aircraft struck while Kandil was in the enclave.

Israel Radio’s military affairs correspondent said the army’s Homefront Command had told municipal officials to make civil defence preparations for the possibility that fighting could drag on for seven weeks. An Israeli military spokeswoman declined to comment on the report.

The Gaza conflagration has stoked the flames of a Middle East already ablaze with two years of Arab revolution and a civil war in Syria that threatens to leap across borders.

It is the biggest test yet for Egypt’s new President Mohamed Mursi, a veteran Islamist politician from the Muslim Brotherhood who was elected this year after last year’s protests ousted military autocrat Hosni Mubarak.

Egypt’s Muslim Brotherhood are spiritual mentors of Hamas, yet Mursi has also pledged to respect Cairo’s 1979 peace treaty with Israel, seen in the West as the cornerstone of regional security. Egypt and Israel both receive billions of dollars in U.S. military aid to underwrite their treaty.

Mursi has vocally denounced the Israeli military action while promoting Egypt as a mediator, a mission that his prime minister’s visit was intended to further.

A Palestinian official close to Egypt’s mediators told Reuters Kandil’s visit “was the beginning of a process to explore the possibility of reaching a truce. It is early to speak of any details or of how things will evolve”.

Hamas fighters are no match for the Israeli military. The last Gaza war, involving a three-week long Israeli air blitz and ground invasion over the New Year period of 2008-2009, killed more than 1,400 Palestinians, mostly civilians. Thirteen Israelis died.

Tunisia’s foreign minister was due to visit Gaza on Saturday “to provide all political support for Gaza” the spokesman for the Tunisian president, Moncef Marzouki, said in a statement.

The United States asked countries that have contact with Hamas to urge the Islamist movement to stop its rocket attacks.

Hamas refuses to recognize Israel’s right to exist. By contrast, Palestinian President Mahmoud Abbas, who rules in the nearby West Bank, does recognize Israel, but peace talks between the two sides have been frozen since 2010.

Abbas’s supporters say they will push ahead with a plan to have Palestine declared an “observer state” rather than a mere “entity” at the United Nations later this month.

(Additional reporting by Maayan Lubell, Jeffrey Heller and Crispian Balmer in Jerusalem; Writing by Jeffrey Heller; Editing by Giles Elgood)

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“30 Rock” character Liz Lemon to get her happy ending

LOS ANGELES (Reuters) – “30 Rock” perpetual unlucky-in-love heroine Liz Lemon is finally getting her happy ending, as NBC invited fans on Thursday to watch her get married this month.

After a string of bad boyfriends and unsuccessful romances, Lemon, played by comedienne Tina Fey, finds her soul mate in budding entrepreneur Criss Chross, who owns an organic gourmet hotdog food truck, played by actor James Marsden on the show.

“Ms. Elizabeth Miervaldis Lemon presents herself to be married to Mr. Crisstopher Rick Chross…But not in a creepy way that perpetuates the idea that brides are virgins and women are property,” NBC said in a mock wedding announcement, true to Lemon‘s feminist principles.

The wedding episode will be aired on November 29, during the Emmy-winning show’s seventh and final season.

While Lemon, 42, has never made it down the aisle before, she has had a couple of doomed engagements in past seasons, including her British boyfriend Wesley Snipes (Michael Sheen), whom she almost settled for before finding love with pilot Carol Burnett (Matt Damon).

The hapless singleton has also endured eventful dates with celebrities such as actor James Franco (along with his Japanese body pillow) and Conan O’Brien.

“30 Rock,” created by Fey and inspired by her stint as head writer for “Saturday Night Live”, follows the day-to-day life of fictional NBC sketch comedy show “TGS with Tracy Jordan,” and also stars Alec Baldwin, Tracy Morgan and Jane Krakowski.

(Reporting By Piya Sinha-Roy, editing by Jill Serjeant)

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Smoking in pregnancy tied to lower reading scores

NEW YORK (Reuters Health) – Babies exposed to their mother’s cigarette smoke in the womb later perform more poorly on reading comprehension tests, according to a new study.

“It’s not a little difference – it’s a big difference in accuracy and comprehension at a critical time when children are being assessed, and are getting a sense of what it means to be successful,” lead author Dr. Jeffrey Gruen of Yale University told Reuters Health.

In the study, researchers found that children born to mothers who smoked more than one pack per day struggled on tests specifically designed to measure how accurately a child reads aloud and if she understands what she read.

On average, children exposed to high levels of nicotine in utero — defined as the minimum amount in one pack of cigarettes per day — scored 21 percent lower in these areas than classmates born to non-smoking mothers. The difference remained even when researchers took other factors — such as if parents read books to their children, worked in lower-paying jobs or were married — into account.

Put another way, among students who share similar backgrounds and education, a child of a smoking mother will on average be ranked seven places lower in a class of 31 in reading accuracy and comprehension ability, said co-author Jan Frijters of Brock University in Ontario, Canada.

Previous studies have found smoking during pregnancy is linked to lower IQ scores and academic achievement, and more behavioral disorders. The authors found no reports so far that zeroed in on specific reading tasks like accuracy and comprehension in a large population.

The team, which published their results in The Journal of Pediatrics, pulled data from more than 5,000 children involved in the Avon Longitudinal Study of Parents and Children (ALSPC) study that began in the early 1990s in the UK. Only data from children with IQ scores of 76 and higher were used. An IQ score of 70 and below can be the sign of a mental disability.

UK researchers collected questionnaires from mothers before and after giving birth. This helps make the self-reported data more trustworthy, explained Sam Oh of the University of California, San Francisco, who wasn’t involved with the work. If mothers knew their child’s reading scores beforehand, they might subconsciously report more or less smoking.

“To me, this study suggests that the effects attributed to in utero smoking can in fact be attributed to the intrauterine environment, and not due to environmental differences that the children grow up in,” Oh told Reuters Health by email.

Large observational studies like this one call attention to patterns, but do not prove a direct cause-effect relationship between cigarette smoking and low reading scores.

Despite public health initiatives to discourage smoking, as many as one in six pregnant American women still light up, according to national surveys by the Centers for Disease Control and Prevention and the U.S. Department of Health and Human Services.

“That is a lot of children,” Dr. Tomáš Paus of the University of Toronto told Reuters Health.

Paus added that the study tied the effects of low test scores to nicotine in cigarettes, which also produce other harmful chemicals and carbon dioxide. Either way, smoking while pregnant seems to put a baby at risk for negative health outcomes.

“We should not be happy with those rates. Smoking during pregnancy is preventable,” Paus said.

SOURCE: http://bit.ly/W7v2kM The Journal of Pediatrics, online November 5, 2012.

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Banks pay $417m to settle charges

16 November 2012 Last updated at 14:16 ET

JP Morgan Chase and Credit Suisse will together pay $ 417m (£263m) to settle charges that they misled investors in residential mortgage-backed securities offerings, US regulators have said.

JP Morgan has agreed to pay $ 296.9m to settle the charges while Credit Suisse will pay $ 120m, the Securities and Exchange Commission (SEC) said.

Both banks agreed to settle without admitting or denying the charges.

The SEC said it plans to distribute the money to harmed investors.

The SEC said that JP Morgan received fees of more than $ 2.7m, and investors sustained losses of at least $ 37m on these undisclosed bad loans.

The bank was also charged for the failure of an investment bank it bought, Bear Stearns, to disclose its practice of obtaining and keeping cash settlements from mortgage loan originators on problem loans that Bear Stearns had sold on.

JP Morgan said it was pleased to have reached an agreement with the SEC to put these matters concerning mortgage-backed securities behind it.

Credit Suisse was accused of similar practices.

‘Ground zero’

“In many ways, mortgage products such as RMBS (residential mortgage-backed securities) were ground zero in the financial crisis,” Robert Khuzami, director of the SEC’s division of enforcement, said in a statement.

“Misrepresentations in connection with the creation and sale of mortgage securities contributed greatly to the tremendous losses suffered by investors once the US housing market collapsed.

“Today’s actions involving RMBS securities are a continuation of the SEC’s strong efforts to pursue wrongdoing committed in connection with the financial crisis.”

Last month, the New York Attorney General sued JP Morgan for allegedly defrauding investors who lost more than $ 20bn on mortgage-backed securities sold by Bear Stearns.

JP Morgan bought Bear Stearns in March 2008.

US mortgage-backed securities were the investment products that sparked the global financial crisis in 2008.

In essence, each security or bond was linked to pools of US mortgage loans, many of which were classified as sub-prime – mortgages awarded to high-risk and low-wage homeowners.

When many of those homebuyers defaulted on their mortgages as the US property bubble burst, it turned the linked securities into bad debt.

This caused losses worth billions of dollars at banks, who were forced to write down the value of their investments.

Banks around the world were affected, not just those in the US, because the securities were resold globally.

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France urges Mali to step up talks with rebels

PARIS (AP) — France‘s president called Thursday for stepped-up talks between Mali’s government and any leaders from its breakaway north “who reject terrorism,” even as African nations geared up for a possible military operation against Islamic extremists there.

President Francois Hollande‘s comments suggested a growing openness to dialogue with the extremists, but he remained committed to supporting the military planning effort.

Northern Mali fell to Islamic extremists in April, after coup leaders toppled the government in Bamako, Mali‘s capital. Fearing that northern Mali could become the latest hotbed of terrorism, France has been a driving force in international efforts to bolster Mali’s army to drive the Islamists from power.

Hollande spoke with interim Mali President Dioncounda Traore by phone on Thursday, partly to detail European efforts to help strengthen Mali’s army.

In recent days, representatives from the most moderate of three al-Qaida-linked groups that control northern Mali have been meeting with Burkina Faso‘s president, appointed as a mediator.

“France reiterates its wish that political dialogue will intensify between Malian authorities and representatives of northern populations who reject terrorism,” Hollande’s office said in a statement. “The acceleration of this dialogue must accompany the progress in African military-planning efforts.”

Earlier this week, the African Union approved a plan that calls for 3,300 African troops to be deployed in order to win back Mali’s north. European countries including France and Germany have expressed a willingness to provide military trainers and logistics support, but have stopped short of committing combat troops.

France, like many European countries, fears that the arid, northern Sahel region of Mali could become a breeding ground for terrorism, where al-Qaida and its allies could plot hostage-takings and attacks in Europe or beyond.

France has millions of people whose families hail from former French colonies in north and west Africa. Authorities have long been concerned that French-born militants could travel abroad for terrorism training and return home later to possibly carry out attacks.

French authorities are already investigating two French citizens who were arrested in Mali and neighboring Niger and are suspected of seeking to join up with the al-Qaida-linked extremists, a judicial official told The Associated Press.

Ibrahim Ouattara, a 24-year-old native of the northern Paris suburb of Aubervilliers who has dual French and Malian nationality, was arrested inside Mali this month and remains in custody there, the official said.

Separately, a 27-year-old Frenchman was arrested in August in Niger and has since been handed over to authorities in France, the official said, speaking on condition of anonymity because she was not authorized to discuss terrorism cases publicly.

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Stars honor Veloso as Latin Grammys person of year

LAS VEGAS (AP) — Juanes, Juan Luis Guerra, Nelly Furtado and Natalie Cole are among the artists who celebrated Brazilian musician Caetano Veloso at a ceremony honoring him as the Latin Recording Academy‘s Person of the Year.

Veloso’s influence as a composer and activist also was the subject of a video featuring Sting and Spanish filmmaker Pedro Almodovar that was shown at the tribute Wednesday at the MGM Garden Arena in Las Vegas.

Veloso said in the video that he never decided to become a musician, but fate and the circumstances of life in Brazil moved him in that direction.

Considered among the most influential Brazilian artists of modern times, the 70-year-old entertainer has recorded more than 40 albums, and won eight Latin Grammys and two Grammy Awards. With his eponymous 1968 album, Veloso launched a new style of music, tropicalia, that saw his Brazilian musical roots mixed with other contemporary styles, including blues, psychedelic rock and the sounds of the Beatles.

The movement comprised a new generation of artists, including Gilberto Gil, Gal Costa and Maria Bethania, who openly expressed political opinion in their music.

In accepting the honor, Veloso said, “It’s too much.”

The Latin Grammy Awards are scheduled to be presented Thursday at the Mandalay Bay Events Center in Las Vegas. The show will be broadcast live on Univision.

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Online:

www.latingrammy.com

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GOP-led states start warming up to health care law

WASHINGTON (AP) — From the South to the heartland, cracks are appearing in the once-solid wall of Republican resistance to President Barack Obama‘s health care law.

Ahead of a federal deadline Friday for states to declare their intentions, Associated Press reporters interviewed governors and state officials around the country, finding surprising openness to the changes in some cases. Opposition persists in others, and there is a widespread, urgent desire for answers on key unresolved details.

The law that Republicans have derided as “Obamacare” was devised in Washington, but it’s in the states that Americans will find out if it works, delivering promised coverage to more than 30 million uninsured people.

States have a major role to play in two of the overhaul’s main components: new online insurance markets for individuals and small businesses to shop for subsidized private coverage, and an expanded Medicaid program for low-income people.

Friday is the day states must declare if they’ll build the new insurance markets, called exchanges, or let Washington do it for them. States can also opt for a partnership with the feds to run their exchanges, and they have until February to decide on that option.

Some glimpses of grudging acceptance across a shifting scene:

— One of the most visible opponents of Obama’s overhaul, Florida Republican Gov. Rick Scott, now says “if I can get to ‘yes,’ I want to get to ‘yes.’”

Florida was a leader in the failed effort to overturn the law in the Supreme Court, and a group formed by Scott ran TV ads opposing it before it passed Congress. But the governor told the AP this week he wants to negotiate with the federal government to try to help the nearly 4 million uninsured people in his state.

— In Iowa, GOP Gov. Terry Branstad says he is postponing a decision because Washington has not provided enough information about key details. But his spokesman, Tim Albrecht, said Iowa is exploring a partnership exchange that could include several states. Albrecht said they’re confident they can get to a state option if needed.

Ohio, like Florida and Iowa a state Obama carried in the election, is leaning toward a partnership with the federal government despite GOP officials’ continued misgivings about the law.

— In Mississippi, Republican insurance commissioner Mike Chaney formally notified Washington on Wednesday that his agency will proceed with a state-run exchange, disappointing GOP Gov. Phil Bryant, who remains staunchly opposed to Obama’s law.

Chaney, too, says he wishes the law could be repealed, but he worries that “if you default to the federal government, you forever give the keys to the state’s health insurance market to the federal government.”

As for trying to fight the feds, Chaney observed: “We tried that 150 years ago in the South, and it doesn’t work.”

— In New Mexico, the administration of Republican Gov. Susana Martinez had been quietly working to put the law into place as the political storm swirled. With a fifth of its population uninsured, the state is planning to run its own exchange.

“The party is over. The opposition is over,” New Mexico Human Services Secretary Sidonie Squier told the AP. “Whatever states didn’t think they were going to do it, I think they’re going to have to do it whether they like it or not. It’s a done deal now.”

Policy experts in Washington are noticing the shift.

“I think it’s a very practical decision for states now,” said Alan Weil, executive director of the nonpartisan National Academy for State Health Policy. “We are going to have a significant number of states running their own exchanges, a significant number where the federal government is running the exchange, and a significant number of partnerships. The bottom line is we are going to have to figure out how to make all three models work.”

Although the public remains divided about the health care law, the idea of states running the new insurance markets is popular, especially with Republicans and political independents. A recent AP poll found that 63 percent of Americans would prefer states to run the exchanges, with 32 percent favoring federal control.

The breakdown among Republicans was 81-17 in favor of state control, while independents lined up 65-28 for states taking the lead. Democrats were almost evenly divided, with a slim majority favoring state control.

There are several potential benefits to a state operating its own exchange, experts say.

The biggest advantage may be that states would be more closely involved in coordinating between the exchanges and Medicaid programs. Because many people are going to be going back and forth between Medicaid and private coverage in the exchanges, states would probably be better served by a hands-on role.

States can also decide whether to allow open access to all insurers, or work only with a panel of pre-screened companies that meet certain requirements.

Also, the exchanges will offer coverage to people buying in the individual and small business markets, areas that states have traditionally regulated. Without a state-run exchange, states could be dealing their own regulators out of the equation, as Mississippi’s insurance commissioner Chaney noted.

When the legislation was being considered in Congress, Democrats in the House wanted to have a national exchange administered by the federal government. But they lost the argument with their centrist Democratic counterparts in the Senate, who wanted state exchanges in order to preserve a state role.

Despite signs of movement toward going along with implementation of the overhaul, some major Republican-led states are holding fast. In Texas, the election results did not change any of the opposition to expanding Medicaid or to setting up insurance exchanges. The same holds for Louisiana, South Carolina, Missouri, Kansas and others.

“Adding more people to an already sinking ship with money that is either being borrowed from China or coming out of taxpayers’ pockets is bad policy and bad for Texans,” said Catherine Frazier, spokeswoman for Gov. Rick Perry. Twenty-seven percent of that state’s residents are uninsured, the largest percentage for any state.

Many Republican state officials complain that the Obama administration simply hasn’t given them enough information. Indeed, several major regulations affecting the exchanges have yet to be released. But that doesn’t seem to have stopped states that made an early decision to proceed.

Virginia, a Republican-led state that voted for Obama on Nov. 6 and also elected a Democratic U.S. senator, is among those defaulting to Washington. But a spokesman for Gov. Bob McDonnell said things may change.

“This is not a final decision,” said Jeff Caldwell. “The fact is, states still need far more information before any final decisions can be made on behalf of Virginia’s taxpayers.” The final call, he added, belongs to the state Legislature.

___

Associated Press writers Gary Fineout and Kelli Kennedy in Florida, Grant Schulte in Nebraska, Ann Sanner in Ohio, Jeff Amy and Emily Wagster Pettus in Mississippi, Barry Massey in New Mexico and Chris Tomlinson in Texas contributed to this report.

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Bernanke: Banks’ tight standards hurting economy

WASHINGTON (AP) — Federal Reserve Chairman Ben Bernanke said Thursday that banks’ overly tight lending standards may be holding back the U.S. economy by preventing creditworthy borrowers from buying homes.

Some tightening of credit standards was needed after the 2008 financial crisis, but “the pendulum has swung too far the other way.” Bernanke said. Qualified borrowers are being prevented from getting home loans, he said during a speech to the Operation HOPE Global Financial Dignity Summit in Atlanta.

Operation HOPE is a non-profit organization that provides free economic education and financial counseling to lower- and middle-income Americans.

Bernanke’s comments came on a day when mortgage buyer Freddie Mac said the average rate on the 30-year fixed mortgage fell to a record low of 3.34 percent. Rates have been low all year but have fallen further since the Federal Reserve started buying mortgage bonds in September to encourage more borrowing and spending.

The rates have helped boost home sales and have led more people to refinance existing loans. Yet many have been unable to take advantage of the low rates because banks now require higher credit scores, stricter income documentation and larger down payments before approving loans.

The Fed has tried to make home-buying more affordable through its bond purchases. Minutes from the central bank’s October meeting released on Wednesday indicated the Fed may pursue more bond purchases in the month ahead. A new program could be announced when the Fed next meets on Dec. 11-12.

In his speech, Bernanke gave no hint of what future moves the Fed might take. But he said officials at the central bank understood the problems still facing the U.S. economy.

Bernanke said the housing has shown signs of recovery this year. But he said construction activity, sales and prices remain much lower than they were before the crisis. About 20 percent of mortgage borrowers remain underwater, meaning that they owe more on their mortgage than their home is worth, he noted.

Bernanke said that the Fed and other regulators would continue to pursue efforts to make credit more available to potential home buyers.

___

Associated Press Writer Michael Biesecker in Atlanta contributed to this report.

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Egypt recalls envoy to Israel after Gaza strike

CAIRO (AP) — Egypt has recalled its ambassador to Israel after an Israeli airstrike killed the military commander of Gaza‘s ruling Hamas.

In a statement read on state TV late Wednesday, spokesman Yasser Ali said that President Mohammed Morsi recalled the ambassador and asked the Arab League‘s Secretary General to convene an emergency ministerial meeting in the wake of the Gaza violence.

Morsi also called for an immediate cease fire between Israel and Hamas, an offshoot of Morsi’s Muslim Brotherhood. Israel says it struck in response to rocket attacks from Gaza.

Hours earlier, Morsi’s Muslim Brotherhood group denounced the Israeli airstrike as a “crime that requires a quick Arab and international response to stem these massacres.”

Relations between Israel and Egypt have deteriorated since longtime President Hosni Mubarak was ousted last year.

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Facebook jumps on biggest lock-up expiration day

NEW YORK (AP) — Facebook‘s stock is up more than 7 percent despite expectations that it would fall because more than 850 million additional shares in the company are being freed up for sale.

Shares of Facebook Inc. are up $ 1.48, or 7.5 percent, at $ 21.34. Facebook went public in May at $ 38 in a much-hyped initial public offering of stock that turned out to be a letdown for investors. Its stock price hasn’t hit $ 38 since.

Wednesday marked the expiration of Facebook’s biggest lock-up period, which is a time following an IPO that prevents insiders from selling stock. In all, 773 million shares became eligible for sale, along with 31 million restricted stock units. And about 48 million shares held by former Facebook employees also became eligible for sale, bringing the total to 852 million. These shares would be on top of what’s already been available for trading, increasing the supply and potentially lowering the overall price.

Lock-ups are common after initial public stock offerings and are designed to prevent a stock from experiencing the kind of volatility that might occur if too many shareholders decide to sell all at once.

The previous lock-up expired on Oct. 29, when U.S. stock markets were closed because of Superstorm Sandy. Facebook’s stock fell nearly 4 percent two days later, when the stock market reopened.

Cantor Fitzgerald analyst Youssef Squali believes a potential increase in the capital gains tax on Jan. 1, when Bush-era tax cuts would expire unless Congress acts, could pressure Facebook’s stock. That said, he called the Menlo Park, Calif.-based social media company a “long-term winner.”

Facebook’s stock saw its biggest one-day gain on Oct. 24, the day after the company reported stronger-than-expected third-quarter results and detailed for the first time how much money it made from mobile ads. The stock, which added 19 percent that day, closed at $ 23.23. Even with Wednesday’s gain, it is still 8 percent below that price.

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Clapton platinum watch nets $3.6 million at auction

GENEVA (Reuters) – An Asian collector bought a platinum chronograph Patek Philippe wristwatch owned by British rock guitarist Eric Clapton for 3.44 million Swiss francs ($ 3.63 million) at auction on Monday, Christie’s said.

The “ultra-rare” reference 2499/100 by the Swiss luxury watchmaker, one of only two cased in platinum, was acquired by Clapton some 10 years ago, it said.

It fetched a combined hammer price and commission that was in line with Christie’s pre-sale estimate of 2.5-4.0 million francs while also setting a world record price for this reference at auction, it said in a statement on its semi-annual Geneva sale.

“The Eric Clapton watch was bought by an Asian private collector,” Christie’s spokesman Cristiano de Lorenzo told Reuters, adding that the buyer had been in the room.

But the top lot at the seven-hour sale was another platinum chronograph Patek Philippe, reference 2458, made in 1952 for legendary American collector J.B. Champion. It fetched nearly 3.78 million Swiss francs and set a world record for a watch without complications, or features beyond the display of hours, minutes and seconds, it said.

Precious Time, an investment watch fund launched by Luxembourg-based Elite Advisers, was the buyer, Christie’s said in a statement.

In all, 96 percent of the 315 lots on offer found new owners, netting 27.04 million Swiss francs ($ 28.52 million), the auction house owned by French billionaire Francois Pinault said.

Clapton’s Patek Philippe, made in the Swiss city in 1987, has a perpetual calendar with moon phases, as well as windows for day and month and dials for seconds and minutes.

Most experts would rank it among the world’s 10 most significant wristwatches that stand out for historical importance, mechanical complexity, beauty, original condition, rarity and superior provenance, Aurel Bacs, international head of Christie’s watch department, said before conducting the sale.

Clapton, the former Cream musician, last year sold more than 70 of his guitars at a charity auction in New York, raising $ 2.15 million for the Crossroads Centre drug and alcohol rehabilitation centre that he founded in Antigua.

Last month in London he sold an abstract painting by German artist Gerhard Richter at rival Sotheby’s for $ 34.2 million, setting a new record for the price paid at auction for the work of a living artist.

Antiquorum’s sale of modern and vintage timepieces, held in Geneva on Sunday evening, netted 8.63 million Swiss francs ($ 9.10 million) for 485 lots sold out of 613 on offer, it said in a statement issued on Monday,

The top lot was a Rolex Single Red Prototype, known as the Sea Dweller Submariner, one of only six produced in 1967 for use by divers. It sold for 490,900 Swiss francs — four time its pre-sale estimate – in its first appearance at auction.

“It is the highest price ever paid for a Rolex sport watch and for a Sea Dweller,” Antiquorum said.

($ 1 = 0.9482 Swiss francs)

(Reporting by Stephanie Nebehay; editing by Patricia Reaney)

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EU approves Bristol-Astra diabetes drug after U.S. rejection

(Reuters) – European regulators have approved the first in a new class of diabetes medicines that work independently of insulin to control blood sugar, the drug’s developers Bristol-Myers Squibb Co and AstraZeneca Plc said on Wednesday.

The approval of Forxiga by the European Commission stands in stark contrast to the rejection of the drug in January by U.S. regulators, who cited concerns about the risk of cancer and liver injury and asked for more clinical data on the once-daily tablets.

The European Medicines Agency in April said it was satisfied those issues had been addressed in the drug’s product label and via a risk management plan for the medicine. But many industry analysts believe the drug’s dim prospects in the larger U.S. market will sharply curtail its potential sales.

The European Commission on Wednesday approved Forxiga, which works by blocking a protein called SGLT2, or sodium-glucose cotransporter 2. It is meant to be used in combination with other treatments for type 2 diabetes, including insulin, or as a standalone treatment for patients who cannot tolerate the widely used oral treatment metformin.

Bristol-Myers and AstraZeneca said Forxiga in clinical trials was associated with a low risk of hypoglycemia, a side effect of many diabetes drugs in which blood sugar drops to levels that cause fainting and other dangerous complications.

Use of the drug in clinical trials was also associated with weight loss and declines in systolic blood pressure.

Johnson & Johnson is awaiting approval of its own SGLT2 inhibitor, canagliflozin. Like Forxiga, it blocks reabsorption of glucose by the kidney and increases glucose excretion in the urine to lower blood sugar, and is also associated with drops in body weight and blood pressure.

Shares of Bristol-Myers slipped 0.8 percent to $ 31.60, while AstraZeneca fell 0.6 percent, both on the New York Stock Exchange, amid similar declines for the broad stock market.

(Reporting By Ransdell Pierson; Editing by Tim Dobbyn)

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Attention, Kmart Shoppers: Flat-Line Special

Kmart, the discounting pioneer owned by Sears Holdings (SHLD), is in the throes of a mass shutdown of stores. After a bad 2011 Christmas, Sears Holdings said it would close up to 120 Sears and Kmart locations; as of January, there were just over 1,300 Kmarts in the U.S. and territories, 800 fewer than a decade earlier, when Kmart slid into bankruptcy as an independent company. In February, the parent posted its biggest quarterly loss in at least nine years. It lost $ 132 million in the July quarter, and analysts expect another loss, on a 10 percent drop in sales, when the company reports on Thursday.

Today, as Amazon (AMZN) wallops all of retail, discounting’s old Big Three has been duopolized down to Wal-Mart (WMT) vs. Target (TGT). According to Bloomberg Industries, department stores now make up less than half the share of the retail industry’s core “general merchandise, apparel and accessories, furniture and other” sales than they did 20 years ago. As for the subject of 30 years ago, that’s when Kmart’s rights to Charlie’s Angel Jaclyn Smith’s clothing line (it still exists) might have been worth something.

It must be asked: Are Black Fridays numbered for the Blue Light Specialist?

“If you’re Kmart, there’s no reason for being,” says Howard Davidowitz, chairman of Davidowitz & Associates, a retail consulting and investment banking shop in Manhattan. “Are they building stores? No. Are they improving anything for the customer? No. Sears Holdings as a company is in liquidation.”

Not that the stock and debt of the parent company exactly scream liquidation. Sears Holdings, the brainchild of hedge fund owner Eddie Lampert, has soared this year as the company has raised cash, bought back stock, and shuttered and divested stores and subsidiaries. But this comes amid the retailer’s fifth straight year of declining revenue; in the latest quarter, Kmart’s comparable store sales were down 4.7 percent.

Sears Holdings was recently kicked out of the Standard & Poor’s 500-stock index. It was removed from the Dow Jones industrial average in 1999.

Lampert, in his letters to shareholders, has chafed at the idea that Sears Holdings has to spend more on marketing and store upkeep at Kmart and Sears.

“Despite what some believed, increased marketing spend and increased inventory dollars do not automatically generate higher sales or higher profit,” he wrote in February. “More marketing and inventory dollars are not required to generate higher sales or profits, especially in a company that already spends over $ 1.5 billion in marketing and has over $ 8 billion invested in inventory on a consolidated basis. In fact, if you were to compare the amount of space and inventory we invest in our Sears apparel and home fashions businesses to other significant softlines retailers, you would agree that it should be possible to more than double sales and generate significantly higher profits without any additional investment in inventory, marketing or physical space. To do this, however, requires changes in our thinking and our processes, some of which are currently under way.”

To wit: Sears Holdings is subdividing existing, operational store space so it can be subleased to grocery stores, health clubs, and a Forever 21 fashion apparel store. The company openly lists its available square footage.

“I think Eddie is trapped in a no-win situation,” says Steven Platt, director of the Platt Retail Institute, a Hinsdale (Ill.) consultancy that publishes the Journal of Retail Analytics. “He can’t turn around the stores and he can’t sell the chain. He can dump assets to generate cash. But Sears Holdings is a retail dinosaur.” Last year, Platt put out a note titled “Sears acknowledges that it is in the real estate liquidation business (sort of),” where he said he was vindicated in his suspicion that Lampert was chiefly interested in “milking” the venerable, but moribund, retailers for cash.

Survival for Kmart, says Platt, “is a matter of degree. The store is irrelevant and its customer base is hurting. But with some 1,300 or so stores and $ 15 billion in revenue, they are not likely to go away quickly.”

Enter Kmart’s central paradox: While the store might have no compelling reason for being, it can’t just be shut down overnight, says Davidowitz. There are, he says, too many moving parts for Sears Holdings’ creditors; too many bank agreements and countless square footage that would suddenly inundate a weak market. He cites the parent company’s recent sale of top locations to General Growth Properties (GGP) as the kind of “orderly liquidation” Lampert can use to preserve its otherwise atrophying value as a retailer. “But can Kmart compete with anyone?” asks Davidowitz. “The answer is no.”

Shannelle Armstrong-Fowler, the Kmart spokeswoman at Sears Holdings, declined to comment, citing a quiet period ahead of the earnings release.

In January, Moody’s (MCO) analysts Scott Tuhy and Kendra Smith downgraded the company’s credit two levels and kept a negative outlook, citing “persistent negative trends in sales, which continue to significantly underperform peers” as the retailer doesn’t invest enough in its stores and service.

To be in discount retailing nowadays is to be bombarded by peer pressure. Witness the resurgence of layaway, which Kmart offers throughout the year and for which it could traditionally count on certain customers to pay a reliable $ 5 or $ 10 fee every few months. In September, though, Kmart moved to free layaway, ostensibly in response to aggressive layaway promotions from Wal-Mart and Toys “R” Us. Then there’s the ubiquitous onslaught of free shipping, as led by Amazon Prime.

All of which makes it ever harder for Kmart to cut to the brutal chase of competing on price. For example, in a Bloomberg Industries study of a basket of back-to-school items, Kmart was mildly cheaper than Staples (SPLS), after being significantly more expensive just three weeks earlier. But even as it managed to beat Staples on price, Kmart remained “significantly more expensive” than Target and Wal-Mart.

Starved for marketing and more expensive than your discount competition is, to paraphrase Dean Wormer, no way to go through life.

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General investigated for emails to Petraeus friend

PERTH, Australia (AP) — In a new twist to the Gen. David Petraeus sex scandal, the Pentagon said Tuesday that the top American commander in Afghanistan, Gen. John Allen, is under investigation for alleged “inappropriate communications” with a woman who is said to have received threatening emails from Paula Broadwell, the woman with whom Petraeus had an extramarital affair.

Defense Secretary Leon Panetta said in a written statement issued to reporters aboard his aircraft, en route from Honolulu to Perth, Australia, that the FBI referred the matter to the Pentagon on Sunday.

Panetta said that he ordered a Pentagon investigation of Allen on Monday.

A senior defense official traveling with Panetta said Allen’s communications were with Jill Kelley, who has been described as an unpaid social liaison at MacDill Air Force Base, Fla., which is headquarters to the U.S. Central Command. She is not a U.S. government employee.

Kelley is said to have received threatening emails from Broadwell, who is Petraeus’ biographer and who had an extramarital affair with Petraeus that reportedly began after he became CIA director in September 2011.

Petraeus resigned as CIA director on Friday.

Allen, a four-star Marine general, succeeded Petraeus as the top American commander in Afghanistan in July 2011.

The senior official, who discussed the matter only on condition of anonymity because it is under investigation, said Panetta believed it was prudent to launch a Pentagon investigation, although the official would not explain the nature of Allen’s problematic communications.

The official said 20,000 to 30,000 pages of emails and other documents from Allen’s communications with Kelley between 2010 and 2012 are under review. He would not say whether they involved sexual matters or whether they are thought to include unauthorized disclosures of classified information. He said he did not know whether Petraeus is mentioned in the emails.

“Gen. Allen disputes that he has engaged in any wrongdoing in this matter,” the official said. He said Allen currently is in Washington.

Panetta said that while the matter is being investigated by the Defense Department Inspector General, Allen will remain in his post as commander of the International Security Assistance Force, based in Kabul. He praised Allen as having been instrumental in making progress in the war.

The FBI’s decision to refer the Allen matter to the Pentagon rather than keep it itself, combined with Panetta’s decision to allow Allen to continue as Afghanistan commander without a suspension, suggested strongly that officials viewed whatever happened as a possible infraction of military rules rather than a violation of federal criminal law.

Allen was Deputy Commander of Central Command, based in Tampa, prior to taking over in Afghanistan. He also is a veteran of the Iraq war.

In the meantime, Panetta said, Allen’s nomination to be the next commander of U.S. European Command and the commander of NATO forces in Europe has been put on hold “until the relevant facts are determined.” He had been expected to take that new post in early 2013, if confirmed by the Senate, as had been widely expected.

Panetta said President Barack Obama was consulted and agreed that Allen’s nomination should be put on hold. Allen was to testify at his confirmation hearing before the Senate Armed Services Committee on Thursday. Panetta said he asked committee leaders to delay that hearing.

NATO officials had no comment about the delay in Allen’s appointment.

“We have seen Secretary Panetta‘s statement,” NATO spokeswoman Carmen Romero said in Brussels. “It is a U.S. investigation.”

Panetta also said he wants the Senate Armed Services Committee to act promptly on Obama’s nomination of Gen. Joseph Dunford to succeed Allen as commander in Afghanistan. That nomination was made several weeks ago. Dunford’s hearing is also scheduled for Thursday.

___

Associated Press writer Slobodan Lekic in Kabul, Afghanistan, contributed to this report.

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Verizon and HTC’s latest twist: The $199 Droid DNA

Verizon and HTC unveiled a new device that the two hope will appeal to customers during the holiday season, while helping to reverse HTC’s floundering fortunes.

The phone, the Droid DNA, sports a 5-inch screen, putting it more in the “phablet” category with Samsung‘s Galaxy Note. It runs on Android 4.1.1 Jelly Bean and includes a boatload of powerful features, including a Super LCD 3 display with 440 pixels per inch, capable of playing 1080p HD video.

HTC noted the screen rivals traditional HDTVs, while the pixel density is among the highest available on any smartphone. The iPhone 5′s Retina display, for example, is 326 pixels per inch.

The device runs on a quad-core, 1.5Ghz Snapdragon processor from Qualcomm, with 4G LTE integrated on the same piece of silicon as the application processor. Having one chip instead of two improves battery life.

The phone is also capable of wireless charging and full HD video chat. The device has an 8-megapixel rear-facing camera and a 2.1-megapixel camera in the front. HTC noted its phone features HTC ImageSense and HTC ImageChip to create faster image processing and better quality photos, as well as a quick-launch camera option.

The Droid DNA also has Beats audio and two amplifiers, one for headphone and one for speaker. And it’s equipped with near-field communications technology to share music and other content by tapping other NFC-enabled devices.

Droid DNA goes on sale on November 21 for $ 199.99 with a two-year contract. Pre-sales begin today. The phone is available exclusively through Verizon.

The hefty specs should appeal to customers looking for alternatives to the latest gadgets from Samsung and Apple during the holiday season. For HTC, it’s pretty important that they do.

The Taiwanese handset maker really needs a hit phone. Previously the darling of the smartphone world, HTC has been having a tough time lately. Samsung and Apple are dominating the industry’s profits and market share, leaving little for HTC, Motorola, Nokia, and other handset vendors. HTC also has faced litigation, though it reached a settlement with Apple a few days ago.

The company has said it plans to go bolder with its messaging to consumers and the media, relying less on joint marketing campaigns with the carriers and standing more independently to tell the HTC story. It also has said it would try to generate buzz through social media and by seeing out influential celebrities and “superfans” for endorsements. So far, it’s unclear whether such steps are paying off.

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Comcast’s NBCUniversal unit lays off 500 employees: source

LOS ANGELES (Reuters) – Comcast Corp‘s NBCUniversal entertainment unit is laying off about 500 employees at cable channels, Jay Leno‘s late-night TV show and the Universal Pictures movie studio, a person with knowledge of the matter said on Monday.

The cuts add up to about 1.5 percent of the company’s workforce of 30,000 employees, the source said.

A large portion of the layoffs occurred at the G4 cable channel, a network about video games and the gaming culture, the source said. Two of the network’s shows were recently canceled.

Other layoffs occurred about two months ago at “The Tonight Show with Jay Leno,” which cut about two dozen crew members.

The company’s movie studio, Universal Pictures, also eliminated about 20 jobs, including some at the home entertainment division. Home entertainment sales have suffered across the industry as traditional DVDs fall from favor with consumers.

Other job cuts are expected at NBC News group and the company’s cable channels, which include USA, Bravo and E!, the source said.

Comcast bought a 51 percent controlling stake in NBC Universal in January 2011.

(Reporting By Ronald Grover; Writing by Lisa Richwine; Editing by Peter Lauria and Paul Tait)

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Lilly arthritis drug shows durability in study

(Reuters) – A pill for rheumatoid arthritis being developed by Eli Lilly and Co and Incyte Corp maintained its effectiveness in reducing painful symptoms through 24 weeks of treatment in a midstage extension study, according to data presented at a medical meeting on Tuesday.

A sub-study of patients taking part in the trial of the drug, baricitinib, also showed that the two highest doses tested helped to reduce joint damage, based on Magnetic Resonance Imaging (MRI) tests.

The companies in June released positive data from the 301-subject Phase II study after 12 weeks of treatment in patients with mild to moderate RA who had an inadequate response to methotrexate. Data from the ongoing extension study, presented Tuesday at the American College of Rheumatology meeting in Washington, measured baricitinib treatment through 24 weeks.

After 24 weeks, 73 percent of patients who received 8 milligrams of the Lilly drug once daily achieved the ACR20 goal, or a 20 percent improvement in rheumatoid arthritis symptoms. That compared with 78 percent who hit ACR20 at 12 weeks.

For the 4 mg dose, 78 percent of patients hit ACR 20 at 24 weeks, up from 75 percent at week 12.

A 2 mg dose that failed to show statistical significance compared with a placebo at 12 weeks, had 63 percent of patients achieve ACR20 by week 24 of treatment, the data showed.

The study also measured ACR50 and ACR70 rates, or 50 percent and 70 percent improvement. All three doses showed improvement at 24 weeks from measurements taken at 12 weeks.

Baricitinib belongs to a hot new class of oral medicines called Jak inhibitors that aim to compete with the multibillion-dollar injected rheumatoid arthritis drugs that currently dominate the market. Pfizer Inc last week became the first company to bring one of the new drugs to market with the U.S. approval of tofacitinib, which will be sold under the brand name Xeljanz.

Jak inhibitors block enzymes believed to be involved in the inflammatory process.

In the sub-study of 154 patients who underwent MRI testing, there was a statistically significant improvement in measures of inflammation and joint damage at the 4 mg and 8 mg doses after 12 weeks compared with placebo, the companies said. The effects persisted through 24 weeks, they said.

In order to compete with the biologic blockbuster injected drugs, such as Abbott Laboratories’ $ 8 billion a year Humira, the Jak inhibitors must show that they can prevent or delay joint deterioration as well as alleviate symptoms.

(Reporting by Bill Berkrot in New York; editing by Matthew Lewis)

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Action pledge in gas market probe

13 November 2012 Last updated at 09:58 ET

Energy Secretary Ed Davey: “Market abuse is always wrong”

Energy Secretary Ed Davey has promised tough action if allegations that firms manipulated the wholesale gas market turn out to be true.

The Financial Services Authority (FSA) and Ofgem are looking into the claims, which were made by a whistle-blower who was active in the market.

Mr Davey said he was “extremely concerned” and would apply the “full force of the law” if needed.

All of the UK’s big six energy suppliers have denied any involvement.

Mr Davey told MPs: “Market abuse is always wrong, but at a time when people and companies are struggling with high energy bills, the country would expect us to take firm action if these allegations prove true, and we will.”

The body that represents the companies, Energy UK, said its members would co-operate fully to rebuild trust.

Its chief executive, Angela Knight, said: “This is a very serious issue which must be investigated swiftly. The gas market is an international one with many overseas companies trading on it, as well as organisations that are not energy companies.

“Customers need to have confidence in markets and authorities need to have the powers to regulate well and take action if required.”

The wholesale gas market includes everything from the UK’s own North Sea gas supplies, to gas from Norway or elsewhere, or arriving in the UK by ship as LNG, liquefied natural gas.

Widespread

The alleged manipulation is said to have reduced the wholesale price.

The whistle-blower, Seth Freedman, worked at ICIS Heren, a financial information company that publishes energy price reports.

Whistle-blower Seth Freedman: “It would seem that if you are manipulating prices on key dates then certainly millions, if not more, are at stake on each contract”

His concerns are focused on one instance on 28 September this year.

But he told the BBC he thought that price-fixing was widespread: “Having spoken to traders and other market participants, it seems like manipulation is rife in the gas market.”

He said even though the alleged instance may have not added to customers’ bills, it was still damaging: “There’s certainly a link. They [the power companies] are telling you: ‘Look, in order to make our profits and cover our costs and so on, we have to give a price to retail customers which reflects the cost to us.’

“But if you can’t trust the market at a wholesale level, it becomes a crisis of confidence. People at retail level are just thinking, ‘I don’t trust these companies’ – and it needs to be scrutinised.”

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Analysis

Jonty Bloom Business correspondent, BBC News

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The allegation claims that dealers make unrealistic bids, at exactly the time when information is being gathered to set the gas price, in an attempt to get a more favourable rate and so make a larger profit.

All the major domestic gas suppliers say that they have not manipulated the market.

But with household energy bills increasing sharply and winter fast approaching, the allegation that the market is vulnerable to manipulation by other unscrupulous dealers is obviously being taken extremely seriously.

‘Less transparent’

Energy companies buy gas at the wholesale price and then sell it on to businesses and domestic users.

The allegation is that the market was rigged in a similar way to the fixing of Libor, the inter-bank lending rate.

It is claimed that on 28 September, dealers made unrealistic bids, at the time when information was being gathered to set the wholesale gas price, to suit their own trading position.

David Hunter, an analyst at M&C Energy Group, said that most wholesale trading is done directly between companies, rather than via an electronic trading system, and that this system is, in theory, easier to manipulate.

He told the BBC: “This sort of trading is less transparent than a fully-fledged market. Hypothetically, someone could seek to artificially lower the price by making small trades below the prevailing market price that may benefit them.”

The cost of wholesale gas makes up the majority of our energy bills – 45% of the average energy bill is made up of the cost of wholesale gas, supply costs and profit margins.

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Energy company responses

EDF Energy said it “does not participate in loss-leading trading activity and considers it to be against existing market regulation”.

“We make information likely to impact market price formation publicly available on our website.”

Npower said: “There is an explicit commitment in our code of conduct to comply with all laws and regulations.”

Scottish Power said that it had “never engaged in trying to fix wholesale gas trading markets”, adding: “Our trading division always acts with integrity and follows all rules in all of its engagements with the market.”

SSE said: “We are entirely confident that our energy portfolio management team operate in a fair and legitimate way.”

E.On said: “We are confident that all of our colleagues always act in the correct manner and as a company we fully abide by all appropriate regulations.”

Centrica, which owns British Gas, said it had “very robust governance and compliance policies” which were regularly reviewed. “Centrica’s traders are prohibited from providing price information to price reporting agencies,” it added.

‘Considering evidence’

The Guardian reported that investigations were taking place into “some of the big six” energy providers, but the brief statements released by both the FSA and Ofgem did not identify any companies.

The FSA said: “We can confirm that we have received information in relation to the physical gas market and will be analysing the information.”

Ofgem also said it had “received information” and added that it would “consider carefully any evidence of market abuse that is brought to our attention as well as scope for action under all our other powers”.

The government is currently increasing regulation of the energy market.

Its Enterprise and Regulatory Reform Bill is intended to improve the competition regime and the protection of consumers and is currently with the House of Lords.

It is also working with Ofgem on the implementation of the EU Remit (Regulation on Wholesale Energy Markets Integrity and Transparency) which may lead to giving Ofgem greater powers to act against market abuse.

‘Unusual’

Labour’s shadow energy secretary, Caroline Flint, said that if the reports proved to be true, they “suggest shocking behaviour in the energy market, that should be dealt with strongly”.

She said that gas and electricity companies should be forced to sell the energy they generate into a pool, in order to open up the market and ensure fairer consumer prices.

ICIS Heren said it had “detected some unusual trading activity on the British wholesale gas market on 28 September 2012, which it reported to energy regulator Ofgem in October”.

It added: “The cause of the trading pattern, which involved a series of deals done below the prevailing market trend, has not yet been established.

“If anyone was to benefit from this, it would have been derivatives traders.”

BBC News – Business

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